Executive Summary: Key Legal and Evidentiary Issues

• PIM sought to register the SWISSKISS trademarks for "Chocolate of Swiss origin," which Hershey opposed based on its registered KISS and KISSES marks for chocolate candy.

• The Registrar of Trademarks and the Federal Court both refused PIM's applications, finding a reasonable likelihood of confusion between the SWISSKISS Marks and Hershey's Trademarks under the Trademarks Act.

• Survey evidence filed by both parties — including the Corbin, Bourque, and Brigley surveys — was found to suffer from validity and reliability issues, including priming bias from repeated use of "Swiss chocolate" and uncontrolled online methodology.

• Central to the appeal was whether the Federal Court erred in treating "SWISS" as a merely descriptive certification mark incapable of contributing distinctiveness to the SWISSKISS Marks.

• Online Internet-based survey panels were scrutinized for lacking a "person in the loop," raising hearsay and evidentiary control concerns, though the Federal Court of Appeal cautioned against categorically excluding such surveys.

• The Federal Court of Appeal unanimously dismissed PIM's appeal, finding no palpable and overriding error in the lower court's factual findings or confusion analysis.

Background and the parties involved

Promotion in Motion, Inc., doing business as PIM Brands, Inc., is a manufacturer and distributor of candy products. In 2013, PIM applied to register two trademarks — the word mark SWISSKISS and the SWISSKISS & Design mark — for the goods "Chocolate of Swiss origin." Hershey Chocolate & Confectionery LLC, one of the world's leading manufacturers of chocolates and snacks whose products are imported and sold in Canada by a wholly owned subsidiary, Hershey Canada Inc., opposed the registration of these marks. Hershey's opposition was grounded in its own registered trademarks KISS and KISSES, which are associated with "solid chocolate candy with or without ingredients such as nuts" and "chocolate candy" respectively.

The Registrar's decision and the Federal Court appeal

The Registrar of Trademarks refused PIM's applications in 2020, finding that PIM had not satisfied its burden on a balance of probabilities to demonstrate no reasonable likelihood of confusion between the SWISSKISS Marks and Hershey's Trademarks under paragraphs 12(1)(d) and 16(3)(a) of the Trademarks Act. PIM then appealed to the Federal Court, seeking to set aside the Registrar's decision. Both parties filed extensive new evidence before the Federal Court, including consumer surveys and an affidavit related to certification marks owned by Chocosuisse, the Association of Swiss Chocolate Manufacturers cooperative. The Federal Court dismissed PIM's appeal on April 9, 2024, concluding that the Registrar had committed no reviewable error.

The survey evidence and its shortcomings

A significant portion of the proceedings concerned survey evidence introduced by both sides. PIM's experts, Dr. Ruth Corbin and Mr. Christian Bourque, conducted online surveys designed to measure whether consumers would mistakenly attribute the SWISSKISS brand to Hershey. The Corbin survey found that only 2% of participants had mistakenly inferred the source of the Design Mark logo as being Hershey, while the Bourque survey found that only 3% of Canadian purchasers of Swiss chocolate mistakenly identified Hershey as the source of the Word Mark. In response, Hershey's expert, Ms. Brigley, conducted a modified survey with participants who had purchased or would purchase "chocolate," finding that 10% of test group participants associated the SWISSKISS brand with Hershey. Another Hershey expert, Dr. Michael Mulvey, opined that the repeated mention of "Swiss chocolate" in PIM's surveys created a priming bias that skewed results away from non-Swiss chocolate manufacturers. The Federal Court found that all of the surveys suffered from validity and reliability issues. In particular, the Court held that the repeated inclusion of "Swiss chocolate" in each of the key questions of PIM's surveys constituted priming bias, and that the online methodology raised concerns about participant identity verification and the ability of participants to revisit the displayed marks via browser back buttons.

The certification mark issue

A pivotal legal question on appeal was whether the Federal Court erred in its treatment of the word "SWISS" within the SWISSKISS Marks. PIM argued that SWISS, as a certification mark registered by Chocosuisse, is a specific type of trademark under the Trademarks Act and should contribute distinctiveness to the composite SWISSKISS mark. PIM contended that the Federal Court's characterization of SWISS as merely a geographically descriptive term tainted the entire confusion analysis, leading the Court to improperly focus on the KISS element and find a high degree of resemblance with Hershey's marks. The Federal Court of Appeal thoroughly examined the statutory framework, including the definitions of "trademark" and "certification mark" in section 2 of the Act, as well as section 25, which specifically addresses descriptive certification marks. The Appeal Court concluded that while a certification mark falls within the broader definition of a trademark, the SWISS mark is a descriptive certification mark whose registrability depends entirely on the special provision of section 25. By its very nature, SWISS is descriptive of the geographic origin of the chocolate and carries no inherent distinctiveness. The Court also noted that it was far from clear that the benefit of the certification mark extends to PIM, as the only piece of evidence relied upon to establish a licence from Chocosuisse was a decision of the US District Court for the District of New Jersey, which the Court found was not a solid ground to establish that PIM was granted such a licence.

The confusion analysis under the Trademarks Act

In assessing likelihood of confusion under subsection 6(5) of the Act, the Court considered the standard factors: inherent distinctiveness, length of use, nature of the goods, nature of the trade, and degree of resemblance. PIM conceded that the length of use favoured Hershey, and did not forcefully argue that the nature of the goods or trade channels would be different. The critical factors were inherent distinctiveness and degree of resemblance. Because the SWISS component was found to be descriptive and to have no or very little distinctiveness, and given the large number of traders using "SWISS" in association with chocolate, KISS remained the most striking element of the SWISSKISS Marks. This created a meaningful degree of resemblance with Hershey's KISS and KISSES marks.

The Federal Court of Appeal's findings on the survey evidence

On the second ground of appeal, the Federal Court of Appeal applied the deferential standard of palpable and overriding error. The Appeal Court acknowledged that the Federal Court may have gone too far in excluding online Internet-based panel surveys to the extent that they do not involve a "person in the loop," noting that online surveys can offer benefits such as cost-efficiency and wider population coverage. However, the Appeal Court found that the other reasons given by the Federal Court — including the priming bias from systematic mention of "Swiss chocolate," the inability to confirm whether the browser back button allowed participants to revisit displayed marks, and the inherent limitations of "named-source test" surveys in proving the absence of confusion — were grounded in the record and entitled to deference. The Court also rejected PIM's argument that a 6.1% net confusion rate is too low to establish likelihood of confusion, finding no basis for the assertion that a 10% threshold is the prevalent standard in Canada and noting that whatever level of confusion is considered sufficient in the United States, that jurisprudence does not bind Canadian courts.

Ruling and outcome

The Federal Court of Appeal unanimously dismissed PIM's appeal, with Chief Justice de Montigny writing the reasons for judgment, concurred in by Justices Webb and Pamel. The Court found no palpable and overriding error in the Federal Court's treatment of the descriptive certification mark issue or its rejection of the survey evidence. Hershey Chocolate & Confectionery LLC was the successful party, and the appeal was dismissed with costs awarded in its favour. The exact amount of costs was not specified in the decision.